Quick fix for mobile data revenue gap could come from IT sector

Posted by Peter Dykes Tuesday, February 9th, 2010

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The recent launch of the iPad, and before that the iPhone, caused a stir among both the technical press and, more important, among the general public in many parts of the world. Mobile network operators, despite what they might say in public, probably viewed the launch of the iPad with some trepidation, but help might come from an unexpected quarter.

Although there is no doubt that the iPhone was good for business in terms of the amount of network traffic it generated, operators have not been able to fully capitalize on that exponential growth. The massive gap between the ever-growing volume of mobile traffic and the stubbornly flat revenues accruing from it is a constant worry for operators, which are looking to close the gap as quickly as possible. The newly launched iPad and its inevitable clones are only likely to exacerbate the problem, and unless operators can generate revenues from the plethora of new services and applications the devices are spawning, they could be left with the dreaded “dumb pipe” networks. What operators need is a quick fix that will enable them to increase revenues in the short term, by implementing operational- and business-support infrastructure for the new services and applications.

Back when circuit-switched mobile voice services were the center of attention, network-equipment vendors that also had handset-manufacturing businesses were quick to point out that although some adjustments might be needed to enable rival manufacturers’ handsets to operate with their infrastructure, if devices and infrastructure were procured from the same source, complete compatibility would ensure a faster rollout and greater reliability. Things have changed significantly since then, and those players that still have both infrastructure and mobile device businesses have adopted very different business models from those with just infrastructure businesses.

Something that has also changed with the introduction of the iPhone is the greater penetration of what are normally termed “smartphones.” But the new breed of devices epitomized by the iPad are closer to laptops and notepads than they are to mobile phones, which means that the competitive landscape for the iPad and its clones will be different from that of the iPhone. Competition will come not only from traditional handset manufacturers but also from IT companies. Many in the latter category not only manufacture terminal devices, such as laptops and notepads, but also have credible offerings in the operational- and business-support-systems sector.

It is just possible, therefore, that these IT vendors will offer an integrated package of the device plus all the back-office support software required to deal with the device’s capabilities and the demands it will make on the application, service and network layers. Such an offering could include HSS, customized SDP, integration with legacy and next-generation networks, and tools for analyzing and managing charging and subscriber data in real time, etc. In addition, it is possible that OSS/BSS vendors could team up with device manufacturers to offer an integrated package. From operators who just want the device and its complete ecosystem up and running as soon as possible and the ability to do more than simple flat-rate charging, such offerings could receive a warm welcome. Issues such as vendor lock-in and standardization tend to be sidelined in situations where the potential for short-term gain exists, so although I am currently unaware of any moves by IT-device manufacturers to put such packages together, I think it is probably only a matter of time before they do.